Net income for the quarter ended December 31, 2016 was $56.6 million, or $0.41 per diluted share, and core net income1 was $56.0 million, or $0.40 per diluted share

Net income for the full year 2016 was $230.2 million, or $1.65 per diluted share, and core net income1 was $217.1 million, or $1.56 per diluted share

Board of Directors increased quarterly dividend by 10% to $0.22 per share

“2016 was a milestone year for First Hawaiian, and we capped off the year with a solid fourth quarter in which we grew total loans and leases to a record $11.5 billion,” said Bob Harrison, Chairman and Chief Executive Officer. “We are pleased with our performance in 2016, as we maintained our strategic and disciplined approach to growing loans and deposits, while maintaining excellent credit quality and sustaining superior financial performance.”

On January 23, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, an increase of $0.02 per share from the dividend paid in December 2016. The dividend will be payable on March 10, 2017 to shareholders of record at the close of business on February 27, 2017.

Earnings Highlights

Net income for the quarter ended December 31, 2016 was $56.6 million, or $0.41 per diluted share, compared to $53.2 million, or $0.38 per diluted share, for the quarter ended September 30, 2016, and $50.2 million, or $0.36 per diluted share, for the quarter ended December 31, 2015. Core net income for the quarter ended December 31, 2016 was $56.0 million, or $0.40 per diluted share, compared to $55.2 million, or $0.40 per diluted share, for the quarter ended September 30, 2016, and $49.8 million, or $0.36 per diluted share, for the quarter ended December 31, 2015. Net income for the full year 2016 was $230.2 million, or $1.65 per diluted share, compared to $213.8 million, or $1.53 per diluted share, for the full year 2015. Core net income for the full year 2016 was $217.1 million, or $1.56 per diluted share, compared to $196.3 million, or $1.41 per diluted share for the full year 2015.

Net interest income for the quarter ended December 31, 2016 was $131.3 million, an increase of $8.6 million compared to $122.7 million for the quarter ended September 30, 2016, and an increase of $15.0 million compared to $116.2 million for the quarter ended December 31, 2015. The increases in net interest income compared to the third quarter of 2016 and the fourth quarter of 2015 were due to higher average balances of loans and investment securities and higher yields on investment securities, partially offset by higher average deposit balances. Net interest income for the full year 2016 was $491.7 million compared to $461.3 million for 2015. The increase in net interest income was primarily attributable to higher average balances of loans and higher yields on investment securities, partially offset by lower yields on loans, lower average balances of investment securities and higher average deposit balances.

Net interest margin was 2.99%, 2.87% and 2.71%, respectively, for the quarters ended December 31, 2016, September 30, 2016, and December 31, 2015. The 12 basis point increase compared to the third quarter of 2016 was due to higher investment portfolio yields, lower premium amortization, and higher loan prepayments, slightly offset by lower loan yields. The 28 basis point increase compared to the fourth quarter of 2015 was due to overall higher earning asset yields. The net interest margin for the full year of 2016 was 2.88%, compared to 2.78% for 2015. The 10 basis point increase in net interest margin was primarily due to higher yields on investments and interest-bearing deposits in other banks, partially offset by lower yields on loans.

Results for the quarter ended December 31, 2016 included a provision for credit losses of $3.9 million compared to $2.1 million in the quarter ended September 30, 2016 and $2.5 million in the quarter ended December 31, 2015. The provision for credit losses for the full year of 2016 was $8.6 million, compared to $9.9 million in 2015.

Noninterest income was $49.0 million in the quarter ended December 31, 2016, an increase of $0.3 million compared to noninterest income of $48.7 million in the quarter ended September 30, 2016 and an increase of $1.8 million compared to noninterest income of $47.2 million in the quarter ended December 31, 2015. The fourth quarter of 2016 included $1.5 million of net gains on the sales of securities and $3.0 million of swap fee income. The third quarter of 2016 included gains of $3.5 million from death benefits and $0.7 million of swap fee income. The fourth quarter of 2015 included $2.7 million of net losses on the sale of securities. Noninterest income for full year 2016 was $217.6 million compared to $211.4 million for 2015. The $6.2 million higher noninterest income in 2016 compared to 2015 was due to higher securities gains of $15.0 million and higher BOLI income of $5.0 million, primarily offset by lower service charges and fee income of $6.0 million and higher miscellaneous other income of $7.2 million in 2015.

Noninterest expense was $82.5 million for the quarter ended December 31, 2016, a decrease of $0.3 million from $82.8 million in the quarter ended September 30, 2016, and an increase of $2.2 million from $80.3 million in the quarter ended December 31, 2015. The slight decrease in noninterest expense compared to the third quarter of 2016 was due to $1.6 million lower salaries and employee benefits expense and $1.7 million lower other expense, largely offset by $1.8 million higher contracted services and professional fees, $0.6 million more in equipment costs and $0.6 million higher regulatory fees. Salaries and employee benefits expense in the third quarter of 2016 included $1.9 million of expenses related to shares granted in connection with our initial public offering. The increase in noninterest expense compared to the fourth quarter of 2015 was primarily due to a $2.5 million increase in occupancy expenses, a $1.8 million increase in contracted services and professional fees, $1.7 million higher regulatory assessment and fees, partially offset by $2.8 million lower salaries and employee benefits and $1.0 million lower cards rewards expenses. Noninterest expense for full year 2016 was $328.8 million compared to $319.6 million in 2015, an increase of $9.2 million, primarily due to $3.5 million higher regulatory assessment and fees, $3.1 million in higher occupancy expenses, and $2.7 million in higher contract services.

The efficiency ratio was 45.8%, 48.3% and 49.1% for the quarters ended December 31, 2016, September 30, 2016 and December 31, 2015, respectively. The efficiency ratio for full year 2016 was 46.4% compared to 47.5% in 2015.

The effective tax rate for the fourth quarter of 2016 was 39.8% compared with 38.4% in the previous quarter and 37.7% percent in the same quarter last year. The effective tax rate for the full year 2016 was 38.1% compared with 37.7% in 2015.

Balance Sheet Highlights

Total assets were $19.7 billion at December 31, 2016, compared to $19.9 billion at September 30, 2016 and $19.4 billion at December 31, 2015.

The investment securities portfolio was $5.1 billion at December 31, 2016, compared to $5.4 billion at September 30, 2016 and $4.0 billion at December 31, 2015. The portfolio remains largely comprised of securities issued by U. S. government agencies.

Total loans and leases were $11.5 billion at December 31, 2016, up 1.1% from $11.4 billion at September 30, 2016 and up 7.4% from $10.7 billion at December 31, 2015.

The growth in loans and leases in the most recent quarter was due to increases in residential real estate loans of $108.8 million, consumer loans of $41.6 million, and commercial real estate loans of $31.6 million. Commercial and industrial loans declined by $25.7 million and construction loan balances declined by $25.3 million. The decline in commercial and industrial loans was due to several large pay downs in the shared national credit portfolio, and the decline in construction loans resulted from the scheduled completion and pay down of residential construction projects. Compared to December 31, 2015, the growth in loans and leases was due to increases in residential real estate loans of $264.0 million, commercial and industrial loans of $182.1 million, commercial real estate loans of $179.0 million, consumer loans of $109.2 million, and construction loans of $82.6 million.

Total deposits were $16.8 billion at December 31, 2016, a decrease of $0.2 billion, or 1.0%, compared with $17.0 billion at September 30, 2016, and an increase of $0.7 billion, or 4.6%, compared to $16.1 billion at December 31, 2015. The decline in deposit balances compared to September 30, 2016 was due to the previously anticipated withdrawal of $440 million of construction-related escrow deposits in the fourth quarter, offset by approximately $270 million of growth.

Asset Quality

The Company's asset quality remained stable during the fourth quarter of 2016. Total non-performing assets declined to $9.8 million, or 0.08% of total loans and leases, at December 31, 2016, down $0.4 million from non-performing assets of $10.2 million, or 0.09% of total loans and leases, at September 30, 2016 and down $7.0 million from non­performing assets of $16.8 million, or 0.16% of total loans and leases, at December 31, 2015.

Net charge offs for the quarter ended December 31, 2016 were $3.4 million, or 0.12% of average loans and leases on an annualized basis, compared to $3.4 million, or 0.12% of average loans and leases on an annualized basis for the quarter ended September 30, 2016 and $2.5 million, or 0.09% of average loans and leases on an annualized basis for the quarter ended December 31, 2015. Net charge-offs for the full year 2016 were $8.6 million, or 0.08% of average loans and leases, compared to net charge-off of $9.2 million, or 0.09% of average loans and leases in 2015.

The ratio of allowance for loan and lease losses to total loans and leases was 1.18% at December 31, 2016 compared to 1.18% at September 30, 2016 and 1.26% at December 31, 2015.

Capital

Total stockholders' equity was $2.5 billion at December 31, 2016, compared to $2.5 billion at September 30, 2016 and $2.7 billion at December 31, 2015.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.36%, 12.75% and 13.85%, respectively, at December 31, 2016, compared with 8.41%, 12.48%, and 13.59% at September 30, 2016 and 9.84%, 15.31%, 16.48% at December 31, 2015.

_________________

1 Core net income is a non-GAAP measure. For more information on this measure, including a reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

First Hawaiian, Inc.

First Hawaiian, Inc. (NASDAQ:FHB) is a bank holding company headquartered in Honolulu, Hawaii. Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit Company’s website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 11:00 a.m. Eastern Time, 6:00 a.m. Hawaii Time. To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID: 49108216. A live webcast of the conference call, including a slide presentation, will be available at the following link: http://edge.media-server.com/m/p/ntjdo6zf/lan/en. The archive of the webcast will be available at the same location. A telephonic replay of the conference call will be available two hours after the conclusion of the call until 2:00 p.m. (Eastern Time) on February 3, 2017. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 49108216.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our prospectus dated August 3, 2016, filed with the SEC in accordance with Rule 424(b) of the Securities Act of 1933.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results. We believe that the presentation of these non-GAAP financial measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses, gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results and enhance the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.

Core net interest margin, core return on average total assets and core return on average total stockholders’ equity are non-GAAP financial measures. We compute our core net interest margin as the ratio of core net interest income to average earning assets. We compute our core return on average total assets as the ratio of core net income to average total assets. We compute our core return on average total stockholders’ equity as the ratio of core net income to average stockholders’ equity.

Return on average tangible stockholders’ equity, core return on average tangible stockholders’ equity, return on average tangible assets, core return on average tangible assets and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our core return on average tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our core return on average tangible assets as the ratio of core net income to average tangible assets. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP.

Tables 13 and 14 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures.

Financial Highlights

Table 1

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

(dollars in thousands except per share data)

2016

2016

2015

2016

2015

Operating Results:

Net interest income

$

131,250

$

122,683

$

116,222

$

491,672

$

461,325

Provision for loan and lease losses

3,900

2,100

2,500

8,600

9,900

Noninterest income

49,021

48,690

47,188

217,601

211,403

Noninterest expense

82,503

82,804

80,294

328,844

319,601

Net income

56,552

53,235

50,211

230,178

213,780

Basic earnings per share

0.41

0.38

0.36

1.65

1.53

Diluted earnings per share

0.41

0.38

0.36

1.65

1.53

Dividends declared per share

0.20

0.20

N/A

0.62

N/A

Dividend payout ratio

49.35

%

52.39

%

N/A

37.27

%

N/A

Supplemental Income Statement Data (non-GAAP):

Core net interest income

$

131,250

$

122,683

$

116,222

$

491,672

$

456,489

Core noninterest income

47,505

48,690

46,582

190,357

188,197

Core noninterest expense

81,920

79,714

80,294

322,624

319,601

Core net income

56,001

55,177

49,834

217,111

196,315

Core basic earnings per share

$

0.40

$

0.40

$

0.36

$

1.56

$

1.41

Core diluted earnings per share

$

0.40

$

0.40

$

0.36

$

1.56

$

1.41

Performance Ratio:

Net interest margin

2.99

%

2.87

%

2.71

%

2.88

%

2.78

%

Core net interest margin (non-GAAP)

2.99

%

2.87

%

2.71

%

2.88

%

2.75

%

Efficiency ratio

45.76

%

48.31

%

49.13

%

46.36

%

47.50

%

Core efficiency ratio (non-GAAP)

45.82

%

46.51

%

49.32

%

47.30

%

49.57

%

Return on average total assets

1.14

%

1.10

%

1.04

%

1.19

%

1.14

%

Core return on average total assets (non-GAAP)

1.13

%

1.14

%

1.03

%

1.12

%

1.05

%

Return on average tangible assets

1.20

%

1.16

%

1.09

%

1.26

%

1.20

%

Core return on average tangible assets (non-GAAP)

1.19

%

1.20

%

1.09

%

1.18

%

1.10

%

Return on average total stockholders' equity

8.97

%

8.45

%

7.23

%

8.96

%

7.81

%

Core return on average total stockholders' equity (non-GAAP)

8.88

%

8.76

%

7.17

%

8.45

%

7.18

%

Return on average tangible stockholders' equity

14.88

%

14.02

%

11.31

%

14.64

%

12.28

%

Core return on average tangible stockholders’ equity (non-GAAP)

14.73

%

14.53

%

11.22

%

13.80

%

11.28

%

Average Balances:

Average loans and leases

$

11,531,684

$

11,261,710

$

10,613,863

$

11,175,213

$

10,297,834

Average earning assets

17,482,648

17,028,930

17,047,767

17,093,114

16,619,854

Average assets

19,778,918

19,314,668

19,208,603

19,334,653

18,785,701

Average deposits

16,861,525

16,392,125

15,795,021

16,275,811

15,319,238

Average shareholders' equity

2,507,514

2,506,099

2,756,977

2,568,219

2,735,786

Per Share of Common Stock:

Book value

$

17.75

$

18.09

$

19.63

$

17.75

$

19.63

Tangible book value

10.61

10.96

12.49

10.62

12.49

Market Value

Closing

34.82

26.86

N/A

34.82

N/A

High

35.47

27.97

N/A

35.47

N/A

Low

25.80

24.25

N/A

24.25

N/A

As of

As of

As of

December 31,

September 30,

December 31,

2016

2016

2015

Balance Sheet Data:

Loans and leases

$

11,520,378

$

11,396,555

$

10,722,030

Total assets

19,661,829

19,892,693

19,352,681

Total deposits

16,794,532

16,965,527

16,061,924

Total stockholders' equity

2,476,485

2,523,963

2,736,941

Asset Quality Ratios:

Non-accrual loans and leases / total loans and leases

0.08

%

0.08

%

0.16

%

Allowance for loan and lease losses / total loans and leases

1.18

%

1.18

%

1.26

%

Capital Ratios:

Common Equity Tier 1 Capital Ratio

12.75

%

12.48

%

15.31

%

Tier 1 Capital Ratio

12.75

%

12.48

%

15.31

%

Total Capital Ratio

13.85

%

13.59

%

16.48

%

Tier 1 Leverage Ratio

8.36

%

8.41

%

9.84

%

Total stockholders' equity to total assets

12.60

%

12.69

%

14.14

%

Tangible stockholders' equity to tangible assets

7.93

%

8.09

%

9.49

%

Non-Financial Data:

Number of branches

62

62

62

Number of ATMs

311

312

311

Number of Full-Time Equivalent Employees

2,179

2,197

2,157

Consolidated Statements of Income

Table 2

Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

(dollars in thousands except per share amounts)

2016

2016

2015

2016

2015

Interest income

Loans and lease financing

$

111,461

$

106,900

$

102,108

$

428,419

$

405,702

Available-for-sale securities

25,884

21,123

18,549

83,019

73,615

Other

968

1,311

1,450

7,082

4,529

Total interest income

138,313

129,334

122,107

518,520

483,846

Interest expense

Deposits

7,048

6,632

5,844

26,650

22,314

Short-term borrowings and long-term debt

15

19

41

198

207

Total interest expense

7,063

6,651

5,885

26,848

22,521

Net interest income

131,250

122,683

116,222

491,672

461,325

Provision for loan and lease losses

3,900

2,100

2,500

8,600

9,900

Net interest income after provision for loan and lease losses

127,350

120,583

113,722

483,072

451,425

Noninterest income

Service charges on deposit accounts

9,388

9,575

10,194

38,147

40,850

Credit and debit card fees

14,339

14,103

14,783

56,071

56,416

Other service charges and fees

8,446

8,768

8,990

35,355

38,641

Trust and investment services income

7,204

7,508

7,061

29,440

29,671

Bank-owned life insurance

1,758

7,115

2,679

15,021

9,976

Investment securities gains, net

1,516

30

(2,672

)

27,277

12,321

Other

6,370

1,591

6,153

16,290

23,528

Total noninterest income

49,021

48,690

47,188

217,601

211,403

Noninterest expense

Salaries and employee benefits

40,471

42,106

43,243

169,233

170,233

Contracted services and professional fees

12,221

10,430

10,467

45,345

42,663

Occupancy

5,125

4,870

2,649

20,116

16,975

Equipment

4,777

4,192

4,850

16,912

15,836

Regulatory assessment and fees

4,103

3,546

2,366

12,972

9,490

Advertising and marketing

1,309

1,769

1,444

6,127

5,472

Card rewards program

4,770

4,512

5,773

15,513

17,687

Other

9,727

11,379

9,502

42,626

41,245

Total noninterest expense

82,503

82,804

80,294

328,844

319,601

Income before provision for income taxes

93,868

86,469

80,616

371,829

343,227

Provision for income taxes

37,316

33,234

30,405

141,651

129,447

Net income

$

56,552

$

53,235

$

50,211

$

230,178

$

213,780

Basic earnings per share

$

0.41

$

0.38

$

0.36

$

1.65

$

1.53

Diluted earnings per share

$

0.41

$

0.38

$

0.36

$

1.65

$

1.53

Dividends declared per share

$

0.20

$

0.20

$

—

$

0.62

$

—

Basic weighted-average outstanding shares

139,530,654

139,500,542

139,459,620

139,487,762

139,459,620

Diluted weighted-average outstanding shares

139,546,875

139,503,558

139,459,620

139,492,608

139,459,620

Consolidated Balance Sheets

Table 3

December 31,

September 30,

December 31,

(dollars in thousands)

2016

2016

2015

Assets

Cash and due from banks

$

253,827

$

371,622

$

300,096

Interest-bearing deposits in other banks

798,231

804,198

2,350,099

Investment securities

5,077,514

5,363,696

4,027,265

Loans and leases

11,520,378

11,396,555

10,722,030

Less: allowance for loan and lease losses

135,494

135,025

135,484

Net loans and leases

11,384,884

11,261,530

10,586,546

Premises and equipment, net

300,788

302,059

305,104

Other real estate owned and repossessed personal property

329

854

154

Accrued interest receivable

41,971

37,107

34,215

Bank-owned life insurance

429,209

432,031

424,545

Goodwill

995,492

995,492

995,492

Other intangible assets

16,809

17,554

21,435

Other assets

362,775

306,550

307,730

Total assets

$

19,661,829

$

19,892,693

$

19,352,681

Liabilities and Stockholders' Equity

Deposits:

Interest-bearing

$

10,801,915

$

11,164,989

$

10,730,095

Noninterest-bearing

5,992,617

5,800,538

5,331,829

Total deposits

16,794,532

16,965,527

16,061,924

Short-term borrowings

9,151

9,151

216,151

Long-term debt

41

41

48

Retirement benefits payable

132,904

139,567

133,910

Other liabilities

248,716

254,444

203,707

Total liabilities

17,185,344

17,368,730

16,615,740

Stockholders' equity

Net investment

—

—

2,788,200

Common stock ($0.01 par value; authorized 300,000,000 shares; issued and outstanding 139,530,654 shares as of both December 31, 2016 and September 30, 2016 and 139,459,620 shares as of December 31, 2015)

1,395

1,395

—

Additional paid-in capital

2,484,251

2,482,679

—

Retained earnings

78,850

50,204

—

Accumulated other comprehensive loss, net

(88,011

)

(10,315

)

(51,259

)

Total stockholders' equity

2,476,485

2,523,963

2,736,941

Total liabilities and stockholders' equity

$

19,661,829

$

19,892,693

$

19,352,681

Average Balances and Interest Rates

Table 4

Three Months Ended

Three Months Ended

Three Months Ended

December 31, 2016

September 30, 2016

December 31, 2015

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in millions)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Earning Assets

Interest-Bearing Deposits in Other Banks

$

673.7

$

0.9

0.57

%

$

1,023.6

$

1.3

0.51

%

$

1,911.8

$

1.5

0.30

%

Available-for-Sale Investment Securities

5,277.2

25.9

1.95

4,743.7

21.1

1.77

4,519.5

18.5

1.63

Loans Held for Sale

—

—

—

—

—

—

2.6

—

3.48

Loans and Leases (1)

Commercial and industrial

3,314.3

25.7

3.09

3,248.1

23.7

2.90

3,019.6

21.8

2.86

Real estate - commercial

2,431.4

23.1

3.78

2,338.2

21.3

3.63

2,232.6

20.8

3.69

Real estate - construction

470.7

3.8

3.21

448.9

3.7

3.29

341.5

2.7

3.11

Real estate - residential

3,636.9

37.0

4.04

3,571.3

36.4

4.06

3,452.9

35.9

4.12

Consumer

1,493.9

20.6

5.49

1,467.0

20.5

5.55

1,362.1

19.4

5.66

Lease financing

184.5

1.3

2.75

188.2

1.3

2.84

205.2

1.5

3.00

Total Loans and Leases

11,531.7

111.5

3.85

11,261.7

106.9

3.78

10,613.9

102.1

3.82

Total Earning Assets (2)

17,482.6

138.3

3.15

17,029.0

129.3

3.02

17,047.8

122.1

2.84

Cash and Due from Banks

312.5

357.1

282.4

Other Assets

1,983.8

1,928.6

1,878.4

Total Assets

$

19,778.9

$

19,314.7

$

19,208.6

Interest-Bearing Liabilities

Interest-Bearing Deposits

Savings

$

4,446.1

$

0.6

0.06

%

$

4,416.4

$

0.6

0.06

%

$

4,297.9

$

0.6

0.05

%

Money Market

2,680.4

0.7

0.10

2,549.3

0.6

0.10

2,572.0

0.6

0.09

Time

3,923.1

5.7

0.58

3,776.6

5.4

0.57

3,748.5

4.7

0.50

Total Interest-Bearing Deposits

11,049.6

7.0

0.25

10,742.3

6.6

0.25

10,618.4

5.9

0.22

Short-Term Borrowings

11.1

—

0.49

18.5

—

0.42

296.4

—

0.05

Total Interest-Bearing Liabilities

11,060.7

7.0

0.25

10,760.8

6.6

0.25

10,914.8

5.9

0.21

Net Interest Income

$

131.3

$

122.7

$

116.2

Interest Rate Spread

2.90

%

2.77

%

2.63

%

Net Interest Margin

2.99

%

2.87

%

2.71

%

Noninterest-Bearing Demand Deposits

5,811.9

5,649.8

5,176.6

Other Liabilities

398.8

398.0

360.2

Stockholders' Equity

2,507.5

2,506.1

2,757.0

Total Liabilities and Stockholders' Equity

$

19,778.9

$

19,314.7

$

19,208.6

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.

Average Balances and Interest Rates

Table 5

Year Ended

Year Ended

December 31, 2016

December 31, 2015

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in millions)

Balance

Expense

Rate

Balance

Expense

Rate

Earning Assets

Interest-Bearing Deposits in Other Banks

$

1,368.9

$

7.1

0.52

%

$

1,651.9

$

4.5

0.27

%

Available-for-Sale Investment Securities

4,549.0

83.0

1.82

4,665.0

73.6

1.58

Loans Held for Sale

—

—

—

5.1

0.2

3.92

Loans and Leases (1)

Commercial and industrial

3,229.5

96.0

2.97

2,869.8

83.9

2.92

Real estate - commercial

2,313.0

86.0

3.72

2,156.2

81.6

3.78

Real estate - construction

436.4

14.2

3.26

371.9

12.4

3.33

Real estate - residential

3,553.6

145.9

4.10

3,383.6

144.7

4.28

Consumer

1,454.4

80.9

5.56

1,299.2

76.6

5.90

Lease financing

188.3

5.4

2.86

217.1

6.3

2.90

Total Loans and Leases

11,175.2

428.4

3.83

10,297.8

405.5

3.94

Total Earning Assets (2)

17,093.1

518.5

3.03

16,619.8

483.8

2.91

Cash and Due from Banks

289.9

284.3

Other Assets

1,951.7

1,881.6

Total Assets

$

19,334.7

$

18,785.7

Interest-Bearing Liabilities

Interest-Bearing Deposits

Savings

$

4,390.3

$

2.6

0.06

%

$

4,172.1

$

1.7

0.04

%

Money Market

2,478.4

2.3

0.09

2,384.8

2.2

0.09

Time

3,817.6

21.7

0.57

3,730.2

18.4

0.49

Total Interest-Bearing Deposits

10,686.3

26.6

0.25

10,287.1

22.3

0.22

Short-Term Borrowings

113.6

0.2

0.17

381.6

0.2

0.05

Total Interest-Bearing Liabilities

10,799.9

26.8

0.25

10,668.7

22.5

0.21

Net Interest Income

$

491.7

$

461.3

Interest Rate Spread

2.78

%

2.70

%

Net Interest Margin

2.88

%

2.78

%

Noninterest-Bearing Demand Deposits

5,589.5

5,032.1

Other Liabilities

377.1

349.1

Stockholders' Equity

2,568.2

2,735.8

Total Liabilities and stockholders' Equity

$

19,334.7

$

18,785.7

(1) Non-performing loans and leases are included in the respective average loan and lease balances. Income, if any, on such loans and leases is recognized on a cash basis.

(2) For the periods disclosed above, the taxable-equivalent basis adjustments made to the table above were not material.

Analysis of Change in Net Interest Income

Table 6

Three Months Ended December 31, 2016

Compared to September 30, 2016

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

(0.5

)

$

0.1

$

(0.4

)

Available-for-Sale Investment Securities

2.5

2.3

4.8

Loans Held for Sale

—

—

—

Loans and Leases

Commercial and industrial

0.5

1.5

2.0

Real estate - commercial

0.9

0.9

1.8

Real estate - construction

0.2

(0.1

)

0.1

Real estate - residential

0.7

(0.1

)

0.6

Consumer

0.3

(0.2

)

0.1

Lease financing

—

—

—

Total Loans and Leases

2.6

2.0

4.6

Total Change in Interest Income

4.6

4.4

9.0

Change in Interest Expense:

Interest-Bearing Deposits

Savings

—

—

—

Money Market

0.1

—

0.1

Time

0.2

0.1

0.3

Total Interest-Bearing Deposits

0.3

0.1

0.4

Short-term Borrowings

—

—

—

Total Change in Interest Expense

0.3

0.1

0.4

Change in Net Interest Income

$

4.3

$

4.3

$

8.6

Analysis of Change in Net Interest Income

Table 7

Three Months Ended December 31, 2016

Compared to December 31, 2015

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

(1.4

)

$

0.9

$

(0.5

)

Available-for-Sale Investment Securities

3.4

3.9

7.3

Loans Held for Sale

—

—

—

Loans and Leases

Commercial and industrial

2.2

1.7

3.9

Real estate - commercial

1.9

0.4

2.3

Real estate - construction

1.0

0.1

1.1

Real estate - residential

1.9

(0.8

)

1.1

Consumer

1.8

(0.6

)

1.2

Lease financing

(0.1

)

(0.1

)

(0.2

)

Total Loans and Leases

8.7

0.7

9.4

Total Change in Interest Income

10.7

5.5

16.2

Change in Interest Expense:

Interest-Bearing Deposits

Savings

—

—

—

Money Market

—

0.1

0.1

Time

0.2

0.9

1.1

Total Interest-Bearing Deposits

0.2

1.0

1.2

Short-term Borrowings

(0.1

)

0.1

—

Total Change in Interest Expense

0.1

1.1

1.2

Change in Net Interest Income

$

10.6

$

4.4

$

15.0

Analysis of Change in Net Interest Income

Table 8

Year Ended December 31, 2016

Compared to December 31, 2015

(dollars in millions)

Volume

Rate

Total

Change in Interest Income:

Interest-Bearing Deposits in Other Banks

$

(0.8

)

$

3.3

$

2.5

Available-for-Sale Investment Securities

(1.9

)

11.3

9.4

Loans Held for Sale

(0.2

)

—

(0.2

)

Loans and Leases

Commercial and industrial

10.7

1.4

12.1

Real estate - commercial

5.9

(1.5

)

4.4

Real estate - construction

2.1

(0.3

)

1.8

Real estate - residential

7.1

(5.9

)

1.2

Consumer

8.8

(4.5

)

4.3

Lease financing

(0.8

)

(0.1

)

(0.9

)

Total Loans and Leases

33.8

(10.9

)

22.9

Total Change in Interest Income

30.9

3.7

34.6

Change in Interest Expense:

Interest-Bearing Deposits

Savings

0.1

0.8

0.9

Money Market

0.1

—

0.1

Time

0.4

2.9

3.3

Total Interest-Bearing Deposits

0.6

3.7

4.3

Short-Term Borrowings

(0.2

)

0.2

—

Total Change in Interest Expense

0.4

3.9

4.3

Change in Net Interest Income

$

30.5

$

(0.2

)

$

30.3

Loans and Leases

Table 9

December 31,

September 30,

December 31,

(dollars in thousands)

2016

2016

2015

Commercial and industrial

$

3,239,600

$

3,265,291

$

3,057,455

Real estate:

Commercial

2,343,495

2,311,874

2,164,448

Construction

450,012

475,333

367,460

Residential

3,796,459

3,687,660

3,532,427

Total real estate

6,589,966

6,474,867

6,064,335

Consumer

1,510,772

1,469,220

1,401,561

Lease financing

180,040

187,177

198,679

Total loans and leases

$

11,520,378

$

11,396,555

$

10,722,030

Deposits

Table 10

December 31,

September 30,

December 31,

(dollars in thousands)

2016

2016

2015

Demand

$

5,992,617

$

5,800,538

$

5,331,829

Savings

4,609,306

4,341,714

4,354,140

Money Market

2,454,013

2,818,132

2,565,955

Time

3,738,596

4,005,143

3,810,000

Total Deposits

$

16,794,532

$

16,965,527

$

16,061,924

Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More

Table 11

December 31,

September 30,

December 31,

(dollars in thousands)

2016

2016

2015

Non-Performing Assets

Non-Accrual Loans and Leases

Commercial Loans:

Commercial and industrial

$

2,730

$

2,933

$

3,958

Real estate - commercial

—

—

138

Lease financing

153

163

181

Total Commercial Loans

2,883

3,096

4,277

Residential

6,547

6,274

12,344

Total Non-Accrual Loans and Leases

9,430

9,370

16,621

Other Real Estate Owned

329

854

154

Total Non-Performing Assets

$

9,759

$

10,224

$

16,775

Accruing Loans and Leases Past Due 90 Days or More

Commercial Loans:

Commercial and industrial

$

449

$

177

$

2,496

Real estate - commercial

—

—

161

Lease financing

83

—

174

Total Commercial Loans

532

177

2,831

Residential

866

1,638

737

Consumer

1,870

2,036

1,454

Total Accruing Loans and Leases Past Due 90 Days or More

$

3,268

$

3,851

$

5,022

Restructured Loans on Accrual Status and Not Past Due 90 Days or More

44,496

46,453

28,351

Total Loans and Leases

$

11,520,378

$

11,396,555

$

10,722,030

Allowance for Loan and Lease Losses

Table 12

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(dollars in thousands)

2016

2016

2015

2016

2015

Balance at Beginning of Period

$

135,025

$

136,360

$

135,447

$

135,484

$

134,799

Loans and Leases Charged-Off

Commercial Loans:

Commercial and industrial

—

(210

)

(101

)

(348

)

(866

)

Total Commercial Loans

—

(210

)

(101

)

(348

)

(866

)

Residential

(3

)

(268

)

(57

)

(799

)

(618

)

Consumer

(5,412

)

(4,878

)

(4,831

)

(18,791

)

(18,312

)

Total Loans and Leases Charged-Off

(5,415

)

(5,356

)

(4,989

)

(19,938

)

(19,796

)

Recoveries on Loans and Leases Previously Charged-Off

Commercial Loans:

Commercial and industrial

23

6

56

251

940

Real estate - commercial

41

42

817

3,329

1,115

Lease financing

1

—

1

2

3

Total Commercial Loans

65

48

874

3,582

2,058

Residential

242

350

100

1,358

2,198

Consumer

1,677

1,523

1,552

6,408

6,325

Total Recoveries on Loans and Leases Previously Charged-Off

1,984

1,921

2,526

11,348

10,581

Net Loans and Leases Charged-Off

(3,431

)

(3,435

)

(2,463

)

(8,590

)

(9,215

)

Provision for Credit Losses

3,900

2,100

2,500

8,600

9,900

Balance at End of Period

$

135,494

$

135,025

$

135,484

$

135,494

$

135,484

Average Loans and Leases Outstanding

$

11,531,684

$

11,261,710

$

10,613,863

$

11,175,213

$

10,297,834

Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding

0.12

%

0.12

%

0.09

%

0.08

%

0.09

%

Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding

1.18

%

1.18

%

1.26

%

1.18

%

1.26

%

GAAP to Non-GAAP Reconciliation

Table 13

As of and for the Three Months Ended

As of and for the Year Ended

December 31,

September 30,

December 31,

December 31,

(dollars in thousands, except per share data)

2016

2016

2015

2016

2015

Net income

$

56,552

$

53,235

$

50,211

$

230,178

$

213,780

Average total stockholders' equity

$

2,507,514

$

2,506,099

$

2,756,977

$

2,568,219

$

2,735,786

Less: average goodwill

995,492

995,492

995,492

995,492

995,492

Average tangible stockholders' equity

$

1,512,022

$

1,510,607

$

1,761,485

$

1,572,727

$

1,740,294

Total stockholders' equity

$

2,476,485

$

2,523,963

$

2,736,941

$

2,476,485

$

2,736,941

Less: goodwill

995,492

995,492

995,492

995,492

995,492

Tangible stockholders' equity

$

1,480,993

$

1,528,471

$

1,741,449

$

1,480,993

$

1,741,449

Average total assets

$

19,778,918

$

19,314,668

$

19,208,603

$

19,334,653

$

18,785,701

Less: average goodwill

995,492

995,492

995,492

995,492

995,492

Average tangible assets

$

18,783,426

$

18,319,176

$

18,213,111

$

18,339,161

$

17,790,209

Total assets

$

19,661,829

$

19,892,693

$

19,352,681

$

19,661,829

$

19,352,681

Less: goodwill

995,492

995,492

995,492

995,492

995,492

Tangible assets

$

18,666,337

$

18,897,201

$

18,357,189

$

18,666,337

$

18,357,189

Basic weighted-average shares outstanding

139,530,654

139,500,542

139,459,620

139,487,762

139,459,620

Diluted weighted-average shares outstanding

139,546,875

139,503,558

139,459,620

139,492,608

139,459,620

Return on average total stockholders' equity(a)

8.97

%

8.45

%

7.23

%

8.96

%

7.81

%

Return on average tangible stockholders' equity (non-GAAP)(a)

14.88

%

14.02

%

11.31

%

14.64

%

12.28

%

Return on average total assets(a)

1.14

%

1.10

%

1.04

%

1.19

%

1.14

%

Return on average tangible assets (non-GAAP)(a)

1.20

%

1.16

%

1.09

%

1.26

%

1.20

%

Total stockholders' equity to total assets

12.60

%

12.69

%

14.14

%

12.60

%

14.14

%

Tangible stockholders' equity to tangible assets (non-GAAP)

7.93

%

8.09

%

9.49

%

7.93

%

9.49

%

Average stockholders' equity to average assets

12.68

%

12.98

%

14.35

%

13.28

%

14.56

%

Tangible average stockholders' equity to tangible average assets (non-GAAP)

8.05

%

8.25

%

9.67

%

8.58

%

9.78

%

Book value per share

$

17.75

$

18.09

$

19.63

$

17.75

$

19.63

Tangible book value per share (non-GAAP)

$

10.61

$

10.96

$

12.49

$

10.62

$

12.49

(a) Annualized for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015.

GAAP to Non-GAAP Reconciliation

Table 14

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

(dollars in thousands, except per share data)

2016

2016

2015

2016

2015

Net interest income

$

131,250

$

122,683

$

116,222

$

491,672

$

461,325

Early loan termination(a)

—

—

—

—

(4,836

)

Core net interest income (non-GAAP)

$

131,250

$

122,683

$

116,222

$

491,672

$

456,489

Noninterest income

$

49,021

$

48,690

$

47,188

$

217,601

$

211,403

Gain on sale of securities

(1,516

)

—

4,737

(4,566

)

(7,737

)

Gain on sale of stock (Visa/MasterCard)

—

—

(2,065

)

(22,678

)

(4,584

)

Gain on sale of other assets

—

—

(1,287

)

—

(3,414

)

Other adjustments(a),(b)

—

—

(1,991

)

—

(7,471

)

Core noninterest income (non-GAAP)

$

47,505

$

48,690

$

46,582

$

190,357

$

188,197

Noninterest expense

$

82,503

$

82,804

$

80,294

$

328,844

$

319,601

One-time items(c)

(583

)

(3,090

)

—

(6,220

)

—

Core noninterest expense (non-GAAP)

$

81,920

$

79,714

$

80,294

$

322,624

$

319,601

Net income

$

56,552

$

53,235

$

50,211

$

230,178

$

213,780

Early loan termination

—

—

—

—

(4,836

)

Gain on sale of securities

(1,516

)

—

4,737

(4,566

)

(7,737

)

Gain on sale of stock (Visa/MasterCard)

—

—

(2,065

)

(22,678

)

(4,584

)

Gain on sale of other assets

—

—

(1,287

)

—

(3,414

)

Other adjustments(b)

—

—

(1,991

)

—

(7,471

)

One-time items(c)

583

3,090

—

6,220

—

Tax adjustments (d)

382

(1,148

)

229

7,957

10,577

Total core adjustments

(551

)

1,942

(377

)

(13,067

)

(17,465

)

Core net income (non-GAAP)

$

56,001

$

55,177

$

49,834

$

217,111

$

196,315

Core basic earnings per share (non-GAAP)

$

0.40

$

0.40

$

0.36

$

1.56

$

1.41

Core diluted earnings per share (non-GAAP)

$

0.40

$

0.40

$

0.36

$

1.56

$

1.41

(a) Adjustments that are not material to our financial results have not been presented for certain periods.

(b) Other adjustments include a one-time MasterCard signing bonus and a recovery of an investment that was previously written down.

(c) One-time items include initial public offering related costs.

(d) Represents the adjustments to net income, tax effected at the Company’s effective tax rate for the respective period.